State officials were just getting over the budget meltdown from the post-Sept. 11 economic downturn, when another budgetary threat came barreling at them.

The Centers for Medicare and Medicaid Services, or CMS, started looking into whether Kansas was using improper techniques to draw down federal matching dollars for Medicaid.

The battle lines were drawn: State leaders said the federal government was changing the rules on them to reduce dollars flowing from Washington, D.C., while federal officials said they were simply trying to protect taxpayers.

Nearly a dozen audits and financial reviews later, the state is settling the issue that will cost Kansas taxpayers $90 million over the next 15 months, according to budget amendments submitted by Gov. Kathleen Sebelius.

"Kansas has made a concerted effort in each of these target areas to develop a comprehensive solution," Sebelius said.

But questions remain: Who was responsible for these costly mistakes, and what is being done about it?

What happened

The dispute was embedded in Medicaid, the taxpayer financed health insurance program that provides coverage to approximately 10 percent of the Kansas population. In Kansas, the federal government pays for about 60 percent of Medicaid, while the state supplies the remaining 40 percent.

The fight focused on funds spent before Sebelius took office and during her first term.

One of the major areas of conflict was over how school districts got reimbursed from federal funds for special education students who received services through Medicaid.

The federal government stopped allowing a "bundled rate," which the schools were using.

"Everything is packaged together and the feds agree to give one amount," Sebelius' budget director Duane Goossen explained. "For the future, we cannot do it that way anymore. We have to do it on a fee-for-service basis."

That change, including some other problems with special education reimbursements, will result in a reduction of federal funds of $37.5 million from past practices and the need for $16.1 million in state funds to pick up future expenses.

CMS deferrals of payments in other areas, such as child welfare and the community mental health system, will also result in the need to spend additional state dollars.

Kansas taxpayers will pay an additional $45.6 million in the current fiscal year "to make up for the loss of federal funds," Sebelius said.

And in the fiscal year that starts July 1, taxpayers will pay an additional $44.5 million in costs related to changes in state policy to meet CMS requirements, according to Sebelius' budget amendments.

Who's to blame?

But while state officials have identified the amount of funding needed to fix the mess, they have been less exact on who was to blame.

State Rep. Bob Bethell, R-Alden, chairman of the House budget committee that deals with Medicaid, said it was a combination of factors.

Over the past 10 to 15 years, as health care costs skyrocketed along with ranks of the uninsured, many states, including Kansas, aggressively sought ways to maximize federal Medicaid dollars.

Kansas may have pushed too hard, Bethell said.

"You want to run with the big dogs; you run with them, but for crying out loud, you don't bite their tails," Bethell said. "We pushed back to the extent they felt they had to do something."

A spokesman for CMS was unavailable for comment. But in the past, CMS officials have said the review of Kansas expenditures was similar to reviews occurring all over the country as the Bush administration increased scrutiny of the way states got federal health care dollars.

As negotiations between the state and CMS continued, the state got rid of its Medicaid consultant, MAXIMUS Inc.

"CMS was extremely pleased to hear we are no longer doing business with that consultant," said Marcia Nielsen, executive director of the Kansas Health Policy Authority.

MAXIMUS officials did not return a phone call seeking comment. The Virginia-based company, which provides consulting services to hundreds of governmental entities, has consistently denied interviews on the subject.

Nielsen said there has been some discussion about whether to take legal action against MAXIMUS. But at this point, she said, she is not sure that would be worthwhile because of protections in their contract.

"If there is no opportunity to go after them, I don't want us to spin our wheels. If there is an opportunity, we ought to think about it," she said.

At this point, Nielsen said she is more concerned with moving forward with CMS. She said the monetary damage could have been 10 times worse.

"CMS was very clear that if you can fix the problem, the liability will be mitigated," she said.

Bethell said state had learned an important lesson.

"As we go forward, we need everything in writing," he said. "The safeguard is in having legislators up here saying let's keep an eye on this."

More like this story on LJWorld.com

Comments

People complain about the cost of health insurance with the private sector insurance compaines, etc. This is a typical example of how the government can and does screws things up. Can't wait until healthcare is free with the government. Let's see now, how are they going to get that extra $90 million from us over the next 15 months? Let somebody else pay for it. Just raise taxes. Isn't that the American way?

In Europe everyone has medical care no matter who you are and it works. No one falls through the cracks. It works in Sweden as well. It's the private sector screwing up medical care for their own personal gain. THEY are the ones who increase the cost of medical care NOT the government. The USA has the most expensive medical care in the world for 5% of the worlds population. In the USA most everyone gets an expensive CATSCAN whether they need it or not. The Bush admin is screwing up the medicare system
telling everyone it is going broke...just like he tells about
Social Security neither of which are true. It's this privatize everything mentality that favors corporate america not USA citizens. Since when has corporate america had citizens first.

Why does anyone believe politicians at all levels who are sponsored by corporate america special interest money? When folks believe anything coming from the Kansas neoconservative republican party the whole world is in trouble.

Two areas have always been looked upon as "well run" and or efficient. Social Security and Medicare/Medicaid until the privatization mentality began surfacing in 1980. The repubs became the repub neoconservative party thus became thieves and thugs. Cannot believe these crooks. The defense deparment spends over about 50 cents out of every tax dollar.... screw that. We need to cut that back by about 50%.

"In Europe everyone has medical care no matter who you are and it works. No one falls through the cracks."

Can't you almost hear Burl Ives? --

Oh, the buzzin' of the bees in the peppermint trees,
'Round the soda water fountains,
Where the lemonade springs and the bluebird sings,
In the Big Rock Candy Mountains

Merill seems unfamiliar with European politics, which has been reduced to little more than debates over whether obscure diseases should be 100% covered, nurses unhappy with pay, doctors unhappy with the hospitals assigned to, and health recipients unhappy with FALLING THROUGH THE CRACKS.

Euros prefer their system nonetheless. (A) they don't see a direct cost just generally sky-high taxes, (B) they're tiny, more communal societies, and (C) they live in ignorance of the alternative, viewing the U.S. as a place where millions of people lead nightmarish lives, lives destroyed by a stingy government, a war of all against all. I'll never forget hearing remarks by a German health minister that the U.S. "doesn't have any public welfare for the needy" - such remarks from a presumptively educated public official from a country whose ENTIRE social system is smaller than the U.S. Medicare system alone.

Windlass - the Bush administration has been the biggest supporter of Big Government in recent memory. They have expanded the size and scope of federal power at every opportunity (the PDP legislation is the most visible example).

In regard to Medicare/Medicaid - the unfunded obligations of these programs are staggering (~65 trillion for Medicare alone). It is immoral to saddle future generations with this debt. These programs are simply not sustainable.

"From the article it sounds to me like the private corporation Maximus was a big part of the problem/overspending"

Deec:

I agree that is exactly the slant the article seems to suggest. Fortunately, I am old and wise enough to see things for what they are, not just what someone tells me they are. I got a hoot over the crack about how glad the feds are that Kansas is not using the services of the particular consultant any longer. Hah!! Of course they don't want that, the consultant helped Kansas (and its taxpayers) share the costs of these services with the rest of the federal taxpayers, rather than being stuck paying for everything on our own. That is the way the scheme was set up when these bills were incurred and Kansas was perfectly within its rights to expect monetary help from the feds. Those currently in charge of the federal government wish (retroactively!!!!) to minimize such participation so that they can fund many of their other follies. This is the multi-million dollar elephant in the room that the article does not mention. What sort of ethically challenged miscreants retroactively change the funding interpretations on the State (you and me) and then expect us to make up the amount that they no longer elect to cover. That is the real scandal here. Unfortunately, it is just another lapse in the ethical makeup of the crew that holds control of the Executive branch of our federal government.

Doesn't anyone else remember that back in the '90s Vermont changed its Medicade accounting and it was like free money just waiting to be picked up? I'm not sure, but I bet MAXIMUS was running around the country selling their services to states so they too could squeeze more money out of the Feds.

As for socialized medicine, a friend who was studying in Sweden had a bad cold and needed to see a doctor. He had to spend half a day calling and calling 'till the doctor answered the phone 'cause doctors don't have receptionists to take care of such things.

On another occasion, he had to take a friend to the Emergency room after an accident. He had to bang on the doors for a while 'cause they were locked and no one was watching them, expecting emergencies to come in ambulances.

Look at the Walter Reed mess. Do you want to put these people in charge of health care for everyone?

I don't think government run health care would work out very well in this country: There are enough people in this country who are terrified that someone will get something they don't deserve that bureaucratic nightmares would become the rule, not the exception.

"Relatively gentle public regulators" lead to inefficient, expensive public treasury-bleeding programs. One hardly needs to be a genius to figure out that expenses carried by everyone are expenses challenged by no one.

The SOLE point of your quote is that consumers of medical services have demonstrated an unwillingness to be said "no" to by EITHER public or private regulators. Unfortunately, as EVERY health care system in the world demonstrates, rationing is unavoidable, whether you're in Canada, or Germany, or Burundi, or Cuba.

Despite your implications, 89% of Americans say they are satisfied with their health care. A majority even say that they are satisfied with the cost of health care. That's almost certainly a result of basic statistics:
1. In the U.K., nearly 3/4 of a million sick people are presently waiting for treatment.
2. In France, the death rate from prostate cancer is 50%; in the U.S. it is 20%.
3. In the U.K., 40% of cancer patients will never be examined by an oncologist at any point prior to death.
4. In Canada, which contracts on a massive scale to send patients across the border to the U.S. for treatment, it takes 17 weeks to see a specialist after referral.
5. A large majority of medical innovation, whether treatment or pharmacology, is iniated or perfected in the U.S. and then exported (or is stolen by) to the rest of the world.

The fact is privatization is the trend in ALL health care systems (outside of places like Cuba) most especially "single-payer" systems - Scandanavia, Germany, Canada, Australia, etc. So far not France or U.K. though but hold on - France is electing a new President right now, and if the U.K. government collapsed today it would be over massive dissatisfaction with ... inefficient and expensive government-provided health care.

I have written a few times that Walmart should institute "doc in a box." I did not even know that Walmart was ahead of me.

Some Walmart stores have urgent care clinics staffed by nurse practiioners, and charge much less than physician offices. I know that my insurance has paid the price a specialist chagres only to receive care from a nurse practiioner at an internal medicine practice here in lawrence. Good for Walmart for finding a way to make health care more affordable.

"Good for Walmart for finding a way to make health care more affordable."

W-M isn't really making health care more affordable. Rather, it shifts costs between departments knowing full well that if they can get you in the door you'll buy stuff. Unfortunately, your local physician's office doesn't stock scrungies or socket head cap screws from China.

Jamesaust wrote: "W-M isn't really making health care more affordable. Rather, it shifts costs between departments knowing full well that if they can get you in the door you'll buy stuff. Unfortunately, your local physician's office doesn't stock scrungies or socket head cap screws from China."

If that were so, then they would not have the lowest price for the other items.

Can you not admit that there is a need for no-frills basic health care? Do we always have to go to the luxurious offices, and have multiple tests, and pay for a staff to file insurance claims, when we think our health problem is relatively minor? And, if it turns out it is not, can get a referral in the right direction? This could save millions in ER costs.